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Risks to Canada in EU free-trade deal outweigh benefits, study says

Stephen Harper will sit down Friday with Herman Van Rompuy, right, president of the European Council, and European Commission President Jose Manuel Barroso, left, in Ottawa for a Canada-EU summit. (GEORGES GOBET / AFP/GETTY IMAGES file photo)

OTTAWA—The first comprehensive examination of Canada’s landmark free-trade deal with the European Union concludes that the benefits to Canadians may be significantly less than portrayed by Prime Minister Stephen Harper’s government.

An analysis by the Canadian Centre for Policy Alternatives (CCPA) of the still-secret text of the agreement says it could weaken the ability of governments in Canada to regulate for the public good or use buy-local procurement policies to promote economic growth in their cities or regions.

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At the same time, the study says the increase in exports to Europe predicted under the Comprehensive Economic and Trade Agreement (CETA) may not materialize.

“Canadians are making a lot of sacrifices to get a deal that mainly benefits large multinational corporations,” says Scott Sinclair, senior trade policy researcher with the CCPA, an Ottawa-based think tank.

The Harper government, which spent five years negotiating CETA, says the agreement will provide a major boost to the Canadian economy by giving Canadian companies access to the EU’s 500 million consumers. And the federal government says the deal protects the ability of governments in Canada to regulate on the public’s behalf.

But the Conservative government has yet to release the 1,500-plus pages of the CETA text and has not responded to questions arising from the detailed text leaked in Europe.

Working from this text, the CCPA has released a 127-page study of the potential benefits and risks of the pact, which still faces a ratification process expected to take until 2016.

The analysis, entitled, “Making Sense of CETA,” concludes that:

Changes to Canadian patent protection rules for pharmaceuticals under CETA will, when fully implemented in several years, delay the availability of cheaper generic drugs. This could cost Canadians an extra $850 million in costs for patented drugs.

The final text includes an investor-state dispute settlement (ISDS) mechanism under which multinational corporations will have the right to go before a special tribunal, rather than regular courts, to sue governments over regulations a company believes are discriminatory. Businesses say an ISDS is needed to protect investments but critics say they give corporations too much power.

CETA will eliminate tariffs on imports to Canada and the EU, opening up the possibility of more export sales for Canadian companies. But the CCPA says this trade liberalization is unlikely to reduce Canada’s current $20-billion trade deficit with the EU. And companies in Canada that have been protected through tariffs — such as processed foods, textiles and motor vehicles — may find it harder to compete.

For the first time in an international agreement signed by Canada, provincial and municipal governments will be subject to procurement commitments that in general bar officials from favouring local companies when handing out contracts above a certain monetary level.

This will “substantially restrict the vast majority of provincial and municipal government bodies from using public spending as a catalyst for achieving other societal goals, from creating good jobs to supporting local farmers to addressing the climate crisis,” the CCPA concludes. There are, however, important exceptions, including Infrastructure Ontario. And Ontario and Quebec will have a limited ability to favour local companies when purchasing transit vehicles.

Many of the complex legal clauses of the agreement appear to be open to interpretation and may not be settled without years of arbitration, trade experts say. This lack of clarity “is another strong argument for a meaningful debate now” in Canada, Sinclair told the Star. Opposition MPs have long complained about the lack of detailed information and discussion on CETA.

On Friday, Harper will sit down with Herman Van Rompuy, president of the European Council, and European Commission President Jose Manuel Barroso in Ottawa for a Canada-EU summit, where last month’s completion of the CETA negotiations will be celebrated.

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